Ellomay Capital Ltd (ELLO) 2015 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Ellomay Capital conference call.

(Operator Instructions)

As a reminder, this conference is being recorded. If you have any objections to the recording you may disconnect.

With us on the line today are Mr. Ran Fridrich, Ellomay's CEO; Yaniv Friedman as Head of Business Development and Strategy and Deputy CEO; and Ms. Kalia Weintraub, Ellomay's CFO.

Before I turn over the call to Mr. Fridrich I would like to remind everyone that certain statements that are not historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the securities law 1968. The words estimate, project, intend, expect, believe and similar expressions are intended to identify forward-looking statements and these involve and are subject to risks and uncertainties that could cause actual results to differ materially from those that may be expressed or implied by our forward-looking statements including changes in regulations, seasonality of the PV business and market conditions. These and other risks and uncertainties associated with the Company's business are described in greater detail in the filings the Company makes from time to time with the Securities and Exchange Commission including its annual report on Form 20-F.

Mr. Fridrich, would you like to begin please?

Yes, thank you operator and welcome everybody. I would like to use this opportunity to congratulate Yaniv Friedman for joining our team as the Head of Business Development and Strategy and as the Deputy CEO.

I will now give an overview of the business. And later on Kalia, our CFO, will give a financial overview of the business. And Yaniv will tell a bit more about himself and his background.

As you all know the first quarter of 2015 was the first period for the Italian new regulation actually to affect the income or the revenues. We took some cost reduction measures to reduce this effect and basically if you look at the numbers you'll see that the net effect was I think around EUR80,000 on the income. This is more or less or even better than we expected when discussed almost a year ago the new regulation that we expected in Italy.

The final effect on the business was very minor and Kalia will tell you more about it later. It is the first time that we are including first-quarter income produced by the three PV plant that we have purchased in Spain on July 2013, 2014 with the capacity of 5.6 megawatts. As of today, the Company owns altogether approximately 30.5 megawatts of PV plants in Italy and Spain.

Regarding our investment in Dorad if we disclose we exercise the option to increase our indirect holding in Dorad. So actually today we are holding around 9.2%, before we were holding 7.5% and we still have a leftover of an option of about 0.2% that we have more or less one year to exercise. We have published the results of Dorad and as you can see, the first quarter of Dorad which is composed of two months of winter tariff which is a high tariff and one month of intermediate season low tariff.

The first-quarter results do not indicate of a full-year results because there is seasonality in Dorad of two strong quarters which is the third quarter and the first quarter and there is two I would say weak or medium quarters which is the second quarter and the fourth quarter. In addition to the PV and Dorad which contributes to our income we are developing our entrepreneurial arm that include the Manara project and other projects that we are currently evaluating.

Regarding the Manara project or the pumped storage project in Manara Cliff we are in early stages of development which include licensing and project planning after acquiring 75% of the project from the owners that actually tried to develop it at the last years. Ellomay is looking for additional investments in the infrastructure and production of energy. Our current team is capable of scaling up its operations without any additional significant G&A cost.

I think this is overall give you I would say a full picture of our business today. And I would like to transfer the call to Kalia to go over the numbers. Kalia?

Yes, thank you Rani. As Rani mentioned before there are several changes in these quarterly results compared to the same quarter last year.

First-quarter revenues were approximately $2.8 million compared to approximately $2.9 million for the first quarter last year. Excluding adverse effect of unfavorable currency effects our revenues were up approximately 90% and increased to approximately EUR2.5 million compared to approximately EUR2.1 million in the first quarter last year.

As Rani mentioned the growth in revenues in euro is mainly the result of an acquisition of three photovoltaic plants in Murcia, Spain in July 2014. The increase was offset by a decrease of approximately 8% in the feed-in-tariffs guaranteed to exist in photovoltaic plants amounting to approximately EUR100,000.

The operating profit we are reporting in connection with our indirect holdings in Dorad was approximately $1.2 million for the first quarter of 2015. As Rani mentioned before Dorad started operations in May 2014 and prior to that was in the construction phase and generated no revenues.

During the first quarter Dorad had revenues of approximately ILS679 million or approximately $171 million. Dorad's operating profit for the first quarter was approximately ILS90 million or approximately $23 million. It is important to mention that the first-quarter results generated by our holdings in Dorad refers only to the holdings of 7.5% as the option to extend our holdings to approximately 9.2% was exercised following the balance sheet date in May 2015.

We executed several forward transactions with the intention to limit the effect of the presentation currency translation adjustment on our balance sheet. Due to such transactions recorded a financing income amounting to approximately $3 million. Net cash provided from operating activities was approximately $600,000 compared to a negative net cash flow from operations of approximately $400,000 for the same quarter last year.

I will now pass over the call to Yaniv and later on we'll take your questions regarding financial measures. Yaniv, go ahead.

Thank you Kalia and hello everyone. First of all thank you Rani for the warm words. And I'm very happy to join the Ellomay team and I'm sure it's going to be an exciting position.

I'm joining Ellomay after four years as an executive vice president of strategy and business development for Delek Drilling and Avner Oil & Gas as part of the Delek Group. Delek as most of you probably know is one of the largest energy companies in Israel and operates and owns the large offshore gas discoveries, offshore Israel and the Leviathan and Tamar and Block 12 in Cyprus.

And Delek was responsible for corporate strategy and business development. I was leading complex transactions and participated in the financing and management of our project, the Leviathan project and I was also running the Delek Block 12 project in Cyprus.

Prior to Delek I was working at M&A corporate strategy and project development in the energy and infrastructure sectors in the US. And I would really like to thank Rani and the Ellomay team for inviting me to join them and thank you all. And I would like to pass over the call to the operator for questions and answers.

(Operator Instructions) There are no questions at this time.

Before I ask Mr. Fridrich to go ahead with his concluding statement I would like to remind participants that a replay of this call will be available according to the details in the press release regarding the call. Mr. Fridrich, would you like to make a concluding statement?

Yes, what I would like to say is we are very happy with the results of the first quarter. I think that we saw that what we expected about the effect of the Italian government change of regulation actually have a minor effect on our projects.

I think that our hedging strategy of the US dollar has proved a good strategy that gave us a very strong hedging. And in general the development of the pumped storage is going as we expected and all components of the Company is functioning according to our expectation. That's all for me and thank you everybody for joining the call.

Thank you. This concludes the Ellomay Capital first-quarter 2015 results conference call.

Thank you for your participation. You may go ahead and disconnect.